Medicare Part D Prescription Drug Coverage

What Is Medicare Part D?

Medicare Part D is prescription drug coverage offered by private insurance companies that contract with Medicare. It helps pay for many outpatient prescription medications that are not covered by Medicare Part A or Medicare Part B.

If you have Original Medicare, you can generally obtain prescription drug coverage through a stand-alone Medicare Part D plan. If you have a Medicare Advantage plan, prescription drug coverage is often included as part of that plan.

If you use Original Medicare together with a Medicare Supplement plan, such as Medicare Supplement Plan G or Medicare Supplement Plan N, you will ordinarily need a separate Part D plan if you want outpatient prescription drug coverage.

Medicare Part D plans can differ substantially in premiums, formularies, drug tiers, pharmacy networks and prescription costs. There is no single Part D plan that is best for everyone.

How Does Medicare Part D Work?

Every Medicare Part D plan has a list of covered medications called a formulary.

Plans commonly divide covered medications into different drug tiers. Depending on the plan and medication, you may pay a fixed copayment or a percentage of the medication’s cost.

A Part D plan may have:

• A monthly premium
• An annual deductible
• Prescription copayments
• Coinsurance for certain medications
• A pharmacy network
• Preferred pharmacies
• Prior authorization requirements
• Step therapy requirements
• Quantity limits

Because these features vary from plan to plan, choosing a prescription drug plan should involve more than simply finding the lowest monthly premium.

How Much Does Medicare Part D Cost in 2026?

Part D costs vary by plan and by the medications you take.

For 2026, the maximum standard Medicare Part D deductible is $615. Some plans may have a lower deductible.

Medicare Part D also limits annual out-of-pocket spending on covered Part D medications. For 2026, the out-of-pocket threshold is $2,100.

Once qualifying out-of-pocket spending reaches that amount, you enter catastrophic coverage and generally pay $0 for covered Part D drugs for the remainder of the calendar year.

Your Part D premium is separate from these prescription costs and varies by plan. Higher-income beneficiaries may also pay an additional income-related Part D amount.

What Happened to the Medicare Part D Donut Hole?

People who have been on Medicare for several years may remember the Part D coverage gap commonly called the donut hole.

The Medicare Part D benefit was substantially redesigned beginning in 2025. The old four-stage structure centered around a coverage gap is no longer the best way to describe current Part D coverage.

The benefit now generally progresses through:

• Deductible stage
• Initial coverage stage
• Catastrophic coverage

For 2026, catastrophic coverage begins after qualifying out-of-pocket spending on covered Part D medications reaches $2,100.

What Is a Medicare Part D Formulary?

A formulary is the list of prescription medications covered by a particular Medicare Part D plan.

Before selecting a plan, confirm that every important medication you take appears on the plan’s formulary.

You should also review:

• The drug’s formulary tier
• Your copayment or coinsurance
• Whether prior authorization is required
• Whether step therapy applies
• Whether the plan imposes a quantity limit

The same medication can be treated very differently by two competing Part D plans.

A medication may be inexpensive under one plan and considerably more expensive under another. That is one reason comparing plans based only on premium can be misleading.

What Are Prior Authorization, Step Therapy and Quantity Limits?

Part D plans may place certain coverage requirements on prescription medications.

Prior Authorization

Prior authorization means the plan may require approval before it will cover a particular medication.

Step Therapy

Step therapy may require you to try another covered medication before the plan will cover the drug your doctor originally prescribed.

Quantity Limits

A quantity limit restricts how much of a medication the plan will cover during a certain period.

These restrictions are important to review when comparing plans, particularly if you take expensive or medically important prescriptions.

Why Your Pharmacy Matters

The pharmacy you use can significantly affect your prescription costs.

Part D plans may have preferred pharmacies where covered medications cost less than they do at other pharmacies participating in the same network.

That means the same prescription under the same Part D plan can sometimes cost more at one pharmacy than another.

When comparing plans, enter the pharmacies you actually use and any alternatives you would realistically consider.

How to Compare Medicare Part D Plans on Medicare.gov

Medicare’s official Plan Compare tool allows you to compare available Part D plans using your actual prescriptions and pharmacies.

Use the official Medicare Plan Compare tool.

Before starting, gather:

• The exact name of every prescription
• Dosage or strength
• Quantity
• Refill frequency
• Pharmacies you currently use
• Other pharmacies you would be willing to use

Entering accurate information is important because Medicare.gov uses your prescriptions and pharmacies to estimate what each available plan may cost you.

How Do You Choose a Part D Plan on Medicare.gov?

Step 1: Enter Your ZIP Code

Go to Medicare.gov Plan Compare and enter your ZIP code.

This allows Medicare to display the prescription drug plans available where you live.

Step 2: Choose Medicare Drug Plans

If you have Original Medicare and need stand-alone prescription coverage, select Medicare drug plans (Part D).

If you are considering Medicare Advantage coverage instead, Medicare.gov can also compare Medicare Advantage plans that include prescription drug coverage.

Step 3: Enter Every Prescription You Take

Enter each medication you currently use.

Make sure you select the correct:

• Drug name
• Dosage
• Quantity
• Refill frequency

Accurate prescription information allows Medicare.gov to provide a much more useful estimate of your potential costs.

Step 4: Select Your Pharmacies

Choose the pharmacies you normally use and any alternatives you would realistically consider.

This matters because preferred-pharmacy pricing can significantly affect what you pay.

Step 5: Compare Estimated Total Yearly Cost

Do not automatically select the plan with the lowest monthly premium.

Compare the estimated total yearly cost based on:

• Monthly premiums
• Deductible
• Your prescriptions
• Copayments and coinsurance
• Your selected pharmacies

A plan with a higher premium can sometimes have a lower overall annual cost because it covers your particular medications more favorably.

Step 6: Check for Drug Restrictions

Look for:

• Prior authorization
• Step therapy
• Quantity limits

A medication appearing on the formulary does not necessarily mean there are no restrictions on how it is covered.

Step 7: Compare Pharmacy Pricing

Compare your estimated prescription costs at the pharmacies you selected.

If another convenient pharmacy has preferred pricing, changing pharmacies may reduce your annual prescription expenses.

Step 8: Select and Enroll in the Plan

After reviewing the available options, Medicare.gov generally allows you to enroll directly through Plan Compare.

Carefully confirm the insurance company and exact plan name before submitting the enrollment.

Keep your enrollment confirmation information.

Why You Should Not Choose a Part D Plan Based Only on Premium

A low monthly premium does not automatically mean a low-cost prescription drug plan.

Suppose one plan costs $8 per month and another costs $30 per month. Looking only at premium, the $8 plan appears cheaper.

But if one of your prescriptions costs $90 per month under the $8 plan and only $10 per month under the $30 plan, the supposedly inexpensive plan could cost substantially more over the year.

Your medications matter. Your pharmacy matters. Your deductible matters. Your premium matters.

The better comparison is usually the estimated total annual cost based on your actual medications and pharmacies.

What Is the Medicare Prescription Payment Plan?

The Medicare Prescription Payment Plan is an optional payment program available to people with Medicare drug coverage.

It allows you to spread certain out-of-pocket prescription expenses across monthly payments during the calendar year instead of paying the entire amount at the pharmacy when a prescription is filled.

The program does not reduce the cost of your medications. It changes when you pay those costs.

This may be useful for someone who expects relatively high prescription expenses early in the year and would rather spread those payments over several months.

You can learn more from the official Medicare Prescription Payment Plan information.

When Can You Enroll in or Change a Medicare Part D Plan?

One of the most common opportunities to change Part D coverage is the Medicare Annual Enrollment Period from October 15 through December 7.

Changes made during this period generally become effective January 1 of the following year.

You may also have opportunities to enroll when you first become eligible for Medicare or during certain Special Enrollment Periods.

The enrollment period available to you depends on your circumstances.

What Is the Medicare Part D Late Enrollment Penalty?

Medicare Part D is optional, but going without Part D or other creditable prescription drug coverage for too long can result in a late enrollment penalty.

Generally, if you go 63 consecutive days or more without Medicare drug coverage or other creditable prescription drug coverage after becoming eligible, you may owe a late enrollment penalty when you later enroll.

The penalty is generally added to your monthly Part D premium and can continue for as long as you have Medicare drug coverage.

This is one reason someone who currently takes few or no prescriptions may still want to consider maintaining Part D coverage.

What Is Creditable Prescription Drug Coverage?

Creditable prescription drug coverage is prescription coverage expected to pay, on average, at least as much as Medicare drug coverage.

Examples may include qualifying prescription coverage from:

• A current or former employer
• A union
• TRICARE
• The Department of Veterans Affairs
• Indian Health Service

Your existing plan should tell you whether its prescription coverage is considered creditable.

If you delay Part D because you have other creditable prescription coverage, keep your Notice of Creditable Coverage. That documentation can be important later if Medicare needs proof that you maintained qualifying coverage.

Should You Review Your Medicare Part D Plan Every Year?

Yes.

Part D plans can change substantially from one year to another.

Changes may include:

• Monthly premiums
• Deductibles
• Formularies
• Drug tiers
• Copayments
• Coinsurance
• Preferred pharmacies
• Prior authorization requirements

Your medications may also change.

A Part D plan that worked well this year may not necessarily provide the best value next year.

During the Medicare Annual Enrollment Period, it is worth entering your current prescriptions and pharmacies into Medicare.gov again and comparing the available plans.

Medicare Part D With a Medicare Supplement

Medicare Supplement insurance generally does not provide outpatient prescription drug coverage.

Someone with Medicare Supplement Plan G or Medicare Supplement Plan N can generally obtain a separate Medicare Part D plan.

Your Medicare Supplement company and your Part D company do not need to be the same insurance company.

The two policies perform entirely different functions.

Medicare Part D vs. Medicare Advantage Prescription Drug Coverage

A stand-alone Medicare Part D plan generally works alongside Original Medicare.

Many Medicare Advantage plans instead include prescription drug coverage within the Medicare Advantage plan.

These are very different arrangements.

If you are deciding between Original Medicare with a Medicare Supplement and Medicare Advantage, read Medicare Advantage vs. Medicare Supplement.

The Bottom Line

Medicare Part D helps pay for outpatient prescription drugs, but choosing the right plan involves more than comparing monthly premiums.

Your medications, formulary coverage, pharmacy, drug restrictions, deductible and total estimated yearly cost can all affect which plan provides the better value.

Medicare.gov’s Plan Compare tool makes it possible to enter your own prescriptions and pharmacies and compare the Part D plans available where you live.

For 2026, the maximum standard Part D deductible is $615, and qualifying out-of-pocket spending for covered Part D drugs is capped at $2,100 before catastrophic coverage begins.

Because plans and prescriptions can change, Part D coverage should be reviewed periodically rather than selected once and forgotten.

Frequently Asked Questions

Is Medicare Part D required?

No. Medicare Part D is optional. However, going without Part D or other creditable prescription drug coverage for 63 consecutive days or more after becoming eligible may result in a late enrollment penalty if you enroll later.

Does every Medicare Part D plan cover the same drugs?

No. Each Part D plan maintains its own formulary and may apply different tiers, copayments, coinsurance and coverage requirements.

What is the maximum Medicare Part D deductible in 2026?

The maximum standard Medicare Part D deductible is $615 in 2026. Individual plans may have a lower deductible.

What is the Medicare Part D out-of-pocket limit in 2026?

The annual out-of-pocket threshold for covered Part D medications is $2,100 in 2026.

Is there still a Medicare Part D donut hole?

The Part D benefit was redesigned beginning in 2025. The traditional coverage-gap or “donut hole” structure is no longer the best description of the current Part D benefit.

Can I choose my own Medicare Part D plan on Medicare.gov?

Yes. Medicare.gov Plan Compare allows you to enter your prescriptions and pharmacies, compare available plans and generally enroll directly.

Should I select the Part D plan with the lowest premium?

Not necessarily. The better comparison is usually the estimated total annual cost based on your medications and pharmacies.

Can I change Medicare Part D plans every year?

Yes. The Medicare Annual Enrollment Period from October 15 through December 7 generally provides an annual opportunity to change Part D coverage for the following year.

Related Medicare Topics

• What Is a Medicare Supplement?
• Medicare Supplement Plan G
• Medicare Supplement Plan N
• Medicare Advantage vs. Medicare Supplement
• Medicare Supplement Open Enrollment Explained

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